Newly sworn-in Minister of Mineral Resources Ngoako Ramathlodi

Parliament - Mineral Resources Minister Ngoako Ramatlhodi signalled on Tuesday that he was intent on a review of the Mineral and Petroleum Resources Development Bill, and that ensuring the state can drill directly for oil and gas was central to his thinking.

In a surprise appearance before Parliament's mineral resources portfolio committee, Ramatlhodi acknowledged that industry players were concerned about the provisions for free-carry interest for the state in the new regulatory regime.

“Industry have been saying we want these figures to be included in the main bill, not the regulations... because they are concerned with the flexibility that the regulations provide.”

The state’s free-carry interest Ä the level of production revenue that accrues to the government from new oil production without it contributing to exploration and development costs Ä was set at 20 percent, but it has the right to acquire the remaining 80 percent “at an agreed price”.

Industry experts have warned this would effectively enable the state to nationalise the nascent oil and gas operations and would scare off foreign investors.

Said Ramatlhodi: “We from government want to make sure that whatever arraignments are made, as we negotiate this aspect, the state is not denied the opportunity to take part directly in the oil and industry at the level of extracting those from the belly of the earth.”

He added that government wanted oil and shale gas exploration to start as soon as possible, and to ensure that it was sustainable.

“Oil and gas are new industries in our country so we need to apply our minds very thoroughly with the aim of ensuring that whatever regime we create under legislation can be sustained in good times and in bad times.

“And that the people of this country are not disadvantaged by a process that has not been checked through thoroughly,” he said.

“Secondly, we want to ensure that we unlock investment as soon as possible, we can't wait to unlock that investment.”

The minister indicated that he intended using objections that the consultation process on the bill was flawed, as grounds to have President Jacob Zuma refer it back to Parliament for review.

“There are constitutional issues relating to the consultations that happened, particularly in relations to the consultations at the level of the National Council of Provinces.

“I understand that a bill can only be referred back on the basis of constitutionality... and we are hoping that issue might actually influence that and then give us a chance to have an opportunity to study the bill.